In the real estate construction sector, concurrent delay is governed by the terms of the contract entered into by the parties; this means that the agreement itself is the mechanism through which the parties allocate all their risks and responsibilities. Nevertheless, there are certain legal concepts that result applicable. For instance, the Colombia Civil Code provides some general rules applicable whenever any of the parties to the agreement incurs in a delay in performance. Article 1610 of the Colombian Civil Code provides that if a contractor incurs in a performance delay (“mora”), the creditor (in this case the constructor who retained the contractor´s services) may file a request before a court to demand, along with the damages resulting from the delay, one of three options at the creditor´s election: (i) performance by the breaching party of the agreed upon obligations, (ii) authorization to enter into a new contract with a third party to execute the unperformed obligations, or (iii) all the damages resulting from the breach. Additionally, Article 1609 of the Colombian Civil Code provides the exceptio non adimpleti contractus defense which allows any party to a contract to withhold the performance of its own obligations if the counterparty has not performed an obligation which should have been performed first in time or concurrently.
Although it is not clear whether it is a well-developed and understood market-practice in the real estate construction sector, it is common for real estate developers and constructors to include a concurrent delay provision in contracts entered into with project investors and purchasers. According to the provision, constructors would not be responsible against purchasers and investors for delays resulting from project contractors’ delays occurring concurrently with delays for which the constructors are responsible.
Even though there does not seem to be a well-developed and understood concept applicable for public works projects, Article 4 of Law 1150 of 2007 provides that all public contracts must include provisions regarding the allocation of foreseeable risks and responsibilities between the contracting parties. To this end, it is very common that if one of the concurrent events is a result of a contractor’s delay caused by a subcontractor’s delay, the contractor would not be entitled to an extension of time or an additional payment because the responsibility for the execution of the project before the contracting authority and is of the contractor. Additionally, it is worth mentioning that the highest administrative court in Colombia (Consejo de Estado) has extended the application of the exceptio non adimpleti contractus to public contracts if the contracting authority is itself the other concurrent cause of delay, conditioned to the following requirements: (i) the existence of a bilateral contract between the parties, meaning that the obligation of one party constitutes the cause of its counterparty’s obligations; (ii) that the breach of the contract is certain and real, meaning that it cannot be invoked due to an eventual or potential breach; (iii) that the breach is grave and decisive and if it comes from the contracting authority, it places the contractor in a reasonable impossibility to fulfill its obligations; and (iv) that the party invoking the exception must be the party that did not have the obligation to fulfill an obligation that must have been executed first in time. The Consejo de Estado has considered that a grave and decisive event attributable to the public authority that can trigger the application of the exception can be the case that the public authority has the obligation to make available the site where the work is to be executed and does not do it timely, or when it does not perform a retainer necessary for the contractor to initiate the works.
Nevertheless, it is worth mentioning that it has been recognized that in certain cases, concurrent delay, if triggered by events attributable to force majeure or public interest reasons, it may allow the parties to agree on suspending the execution of the contract. Even more, if such kind of concurrent delay severely affects the financial equilibrium of the contract, the contracting party may request to the contracting authority for compensation of damages or the recognition of additional costs.
It is worth mentioning that in the absence of an express contractual provision or a special regulation applicable to public contracts, Article 13 of Law 80 of 1993 cross refers to the Colombian civil and commercial code stipulations which are described in the abovementioned paragraph.